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FOMC’s 'forward guidance' to see major changes - Nomura

FXStreet (Bali) - It seems likely that there will be major changes to the FOMC’s “forward guidance” at the meeting in September, after what we saw last week, notes Nomura Economists.

Key Quotes

"It now seems likely that there will be major changes to the FOMC’s “forward guidance” at the meeting in September. (Note that some change will have to happen by October at the latest, as the current forward guidance references the end of asset purchases.)"

"We think the FOMC will add language that Yellen used last week (and before) to stress that interest rate decisions are going to be “data dependent.”

"We now think that it is more likely than not that the FOMC will drop the “considerable time” phrase from the FOMC statement at their meeting in September."

"We want to stress, however, that we do not think that the FOMC will want to send a signal that a change in interest rates is, in any sense, imminent."

"In this context, we think that the FOMC will try to incorporate language that will send the signal that lift-off is still some time off and that future decisions are not on a preset course."

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